Investing in Vietnam Electronics & Components: Licensing, Incentives, and Location Choices

Vietnam’s electronics and components industry has emerged as one of the country’s defining growth drivers. In 2024, exports of electronics, computers, and components reached US$72.6 billion, a 26.6 percent year-on-year increase, accounting for almost 18 percent of Vietnam’s total export turnover. Broader calculations that include phones and related equipment place the figure at US$132 billion, or roughly 34 percent of total exports, with projections for 2025 exceeding US$140 billion.

The market is highly concentrated. Just 48 foreign-invested enterprises account for about 70 percent of electronics exports, with Samsung alone responsible for 30 percent and Apple-linked vendors contributing around 9 percent. This dominance underscores both the opportunities and the competitive pressures facing new entrants. For investors, success begins with sequencing licenses correctly and choosing the right investment location to capture available incentives.

Vietnam’s labor cost advantage

Vietnam’s appeal lies not only in export growth but also in its cost competitiveness. As of early 2025, average monthly salaries in the manufacturing sector are about VND 8.4 million (US$332), while entry-level factory workers in non-specialized roles often earn closer to US$250 per month. Compared to China, Vietnam’s overall operating costs are around 50 percent lower, providing a significant edge for labor-intensive assembly operations.

Regional wage differences add another layer. Salaries in northern hubs such as Bac Ninh and Hai Phong are typically 10 to 15 percent lower than in Ho Chi Minh City or Binh Duong, making them attractive for high-volume plants.

Vietnam also offers a growing technical talent pool. The country produces more than 80,000 engineering and IT graduates annually, while universities in Hanoi and Ho Chi Minh City have become feeder institutions for electronics and semiconductor employers.

The government has invested in vocational training to expand the pipeline, yet challenges remain: nearly 45 percent of foreign-invested manufacturers report difficulties recruiting skilled technicians. For investors, workforce planning — through training programs, partnerships with universities, or regional labor mobility — is as crucial as managing salary budgets.

The licensing framework: IRC before ERC

All foreign investors must first secure two core approvals. The Investment Registration Certificate (IRC) sets the project’s capital, scope, and approving authority, which may be a provincial department or an industrial zone management board. Once granted, the Enterprise Registration Certificate (ERC) establishes the company as a legal entity, allowing it to sign contracts, recruit staff, and begin operations.

Statutory timelines are relatively efficient: the IRC is capped at 15 working days, and the ERC typically issues within 3 to 5 working days afterward. In practice, investors should allow for 30 to 45 working days to complete both steps, depending on sector complexity and location. Careful sequencing is critical, since errors in the IRC stage can delay ERC approval and disrupt project rollout, particularly for investors planning to import machinery under tax-exempt status.

Location options: industrial zones versus hi-tech parks

Vietnam offers two principal frameworks for electronics and components investors, each suited to different business models and strategic objectives.

Industrial zones (IZs) form the backbone of Vietnam’s manufacturing sector. By late 2024, the country had 447 established zones, with 304 operational and more than 11,200 FDI projects employing over 4.1 million workers. Occupancy rates average above 80 percent, reaching nearly 89 percent in southern hubs like Binh Duong and Dong Nai. Clusters in Bac Ninh and Hai Phong have become magnets for electronics supply chains, hosting Samsung suppliers and other global manufacturers.

These zones are best suited for high-volume assembly and component production, where investors prioritize cost control, rapid construction, and supply-chain adjacency. Lower land costs in northern provinces, combined with semi-skilled labor availability, make them especially attractive for smartphone, consumer electronics, and component producers seeking speed to market and scalability.

While industrial zones support scale and efficiency, hi-tech parks cater to a different investor profile. Designed for innovation-led projects with higher capital intensity, Saigon Hi-Tech Park in Ho Chi Minh City, Hoa Lac near Hanoi, and Da Nang Hi-Tech Park together host more than 350 projects with nearly US$50 billion in registered capital. Saigon Hi-Tech Park alone accounts for US$12.3 billion in projects, including Intel’s US$1 billion facility, and exported US$20.7 billion worth of products in 2024.

These parks are most appropriate for semiconductors, advanced R&D, and firms introducing proprietary technologies. Investors benefit from extended tax holidays, reduced CIT rates, and direct linkages with universities and research institutes. For example, Saigon Hi-Tech Park’s proximity to top engineering schools supports recruitment and collaboration. Companies with global IP portfolios or stricter data-security requirements may also find these parks better aligned with their needs.

Taken together, the two frameworks provide distinct pathways into Vietnam’s electronics sector. Hi-tech parks tend to attract closer central government attention and policy support, making them a fit for investors seeking to align with Vietnam’s industrial development agenda, while industrial zones offer flexibility for mid-sized projects that require modular expansion without higher entry thresholds.

Ultimately, the right choice depends on scale, capital intensity, workforce requirements, and long-term strategic goals. Assessing these factors at the licensing stage ensures investors capture the right incentives and avoid costly restructuring later.

Incentive frameworks by location

Vietnam ties investment incentives directly to project scope and location. In industrial zones, investors benefit from import duty exemptions on machinery and eligible raw materials, along with corporate income tax holidays that typically include two years of full exemption followed by four years at 50 percent of the standard rate. Selected provinces also offer land rental exemptions to attract larger-scale projects, making IZs highly competitive for manufacturing-oriented investors.

In hi-tech parks, incentives are more extensive. Projects located in these areas may enjoy four years of full corporate tax exemption, followed by nine years at half the standard rate, and in many cases a preferential corporate income tax rate of 10 percent for up to 15 years instead of the general 20 percent. Broader exemptions for land rental and infrastructure usage fees are also available, particularly for projects that emphasize innovation or advanced technology.

In 2023, the government formally designated semiconductors and advanced electronics as national priority sectors, which means qualifying projects can secure enhanced tax holidays and preferential land treatment.

Because eligibility is determined at the IRC stage, precision in drafting business lines and project scope is essential for investors who want to maximize these benefits.

Compliance package that protects incentives

Securing incentives is only the first step; maintaining them requires careful compliance throughout the life of the project. Investors must ensure that all import and export licenses are properly managed, with accurate HS code classifications to avoid audits and unexpected back-tax claims. Electronics and semiconductor projects also face strict environmental obligations, including mandatory Environmental Impact Assessments and ongoing reporting under Vietnam’s environmental law.

Another key area is capital contribution: investors are expected to inject the registered capital within the timeframe approved in the IRC, and delays can result in the cancellation of tax holidays. At the same time, labor and social insurance obligations must be met in full, as Vietnam requires all employers to contribute to mandatory schemes for local employees. In recent years, provincial authorities have tightened enforcement, especially in industrial zones where compliance histories are reviewed before incentive renewals.

Companies that fall behind on filings or underreport contributions risk not only fines but also the withdrawal of their incentives. A structured compliance calendar that covers financial, environmental, and HR obligations is therefore essential to safeguard long-term benefits.

Applications in practice

A smartphone component producer in Bac Ninh selected an industrial zone location to integrate with upstream suppliers, leverage lower northern wage rates, and secure duty exemptions on imported machinery. The decision allowed rapid scaling while minimizing costs.

In contrast, a semiconductor R&D firm based in Hoa Lac Hi-Tech Park secured four years of corporate tax exemption and nine years at half rate, while partnering with local universities for research. Despite higher upfront requirements, the project aligned with its innovation roadmap and secured long-term fiscal advantages.

These cases highlight how zone selection and licensing accuracy directly shape costs, compliance exposure, and growth outcomes.

Positioning electronics investments for success in Vietnam

Vietnam’s combination of cost-competitive labor, export momentum, and diversified industrial infrastructure has made it a pivotal hub in global supply chains. With licenses sequenced correctly, incentives aligned at the outset, and compliance embedded in operations, foreign investors can establish a strong foothold in one of Asia’s fastest-growing electronics markets.

This article first appeared on ASEAN Briefing, our sister platform.